Recently, they have been increasingly discussed: NFT. Digital art objects that make the hearts of consumers and entrepreneurs in the Netherlands beat faster. The market for these non-fungible tokens is growing rapidly, and the enthusiasm of entrepreneurs to dive in is even greater. Suddenly more doors are opening for online retailers, but what’s sensible: kicking in that door blindly or peering carefully through the keyhole?
First some background. Because no matter how much you read about them, those NFTs are still hard for most consumers to understand. A non-fungible token loosely translates as a non-replaceable digital property certificate on the blockchain that is linked to a unique digital item. Thus, the buyer of an NFT owns a unique digital product, of which it is easy to find out through the blockchain that the owner is the owner. The registry of NFTs is linked to a personal digital wallet; this allows the owner to prove that he owns the digital product. However, the owner does not have exclusive rights to the specific item. It is economic property.
That sounds complicated, and it is. Tech expert Jarno Duursma summed up this description on his blog as follows: ‘If we translate this into the physical world, you have a certificate of ownership that is in a glass safe that only you have the key to. Because you have the key, it is very clear that you are the owner. Because the safe is made of glass, everyone can see what’s inside and everyone knows it’s their property.’
So far the explanation. Simply put, the advent of NFTs provides a unique opportunity for brands to enter a new market. But is it wise to invest in it now? ‘I wouldn’t blindly go into NFT development at this point. Firstly, it costs a lot of capacity and, secondly, a lot of development budget,” says Henk Hofstede, Retail Banker at ABN Amro. He follows the development of blockchain and NFT and recently wrote an article about the phenomenon. Bottom line: It will be some time before NFTs make a substantial contribution to the revenues of, in particular, fashion retailers, but they are already adding value in the creative and marketing fields. ‘We are still a long way from where we want or can be, but NFTs and more broadly the metaverse will have an impact on the physical high street. If the creators of the metaverse do what they promise in the next ten or fifteen years, it will even have a huge impact. Because you can easily enter the shopping street, see and buy products through new digital channels. Eventually, that will become more common.
“It may seem like a far-fetched spectacle now, but you have to remember that not too long ago nobody had a cell phone. Now it is an indispensable part of our lives. The internet is a 2D variant and the metaverse is the 3D variant where you will soon be able to completely lose yourself in a new reality.
Hofstede already mentions it: the metaverse. Ever since Mark Zuckerberg of Meta (the parent company of Facebook) announced the arrival of the new digital reality last year, several brands have eagerly jumped on it. NFTs are closely related to this, because they allow consumers in the metaverse to purchase and own products, thus creating their own digital identity. Hofstede also claims that NFTs offer opportunities for fashion retailers, especially those active in the luxury segment.
One such player is Winkelstraat.nl. At the end of last year, this platform launched an NFT(EE) in collaboration with the artist Gab Bois [van Tee-shirt, red.]: specifically a physical t-shirt with the Organic Organs artwork, human organs represented in fruits, which can be admired through an AR filter and auctioned off to a lucky person through the Opensea.io NFT marketplace. “NFT is a hot topic, especially among young people,” Winkelstraat.nl founder Joost van der Veer begins: “We find it interesting to learn how we can combine the two worlds of cryptocurrencies and fashion, and this project was born.” . . The idea of the NFT, that is, the digital ownership certificate, is very interesting to develop a concept around. We constantly ask ourselves the question: how can we be relevant to the young target group we are addressing? And we launched that NFT(EE) under the banner of a new form of ownership. Our brand promise is: We help you own it and we sell unique items where we want to help people develop. This fits very well with that.
According to Van der Veer, NFTs remain a thing of the future for retailers and entrepreneurs. This does not apply to young people. ‘Where fashion is very visible in the physical world, young people are already very present in the digital world. That is why it is interesting to make the link between the physical product and being able to take it with you to the digital world. That started with gaming and back in the days of Farmville. They used to call you crazy for spending money on a digital cow. That’s not so strange anymore these days. Virtual fashion is something that is getting bigger and bigger. You already have brands that offer more and more virtual products, for example sneakers. But also that you can wear those shoes in a game. For example, Balenciaga developed a collection especially for the game Fortnite.’
As Van der Veer points out: Brands and retailers are fully committed to the metaverse and NFTs. In fact, it’s so popular that while I was writing this article, the undersigned received a press release from Spanish retailer Mango, which, yes, is entering the metaverse with three NFT artworks. But isn’t one too premature? We discussed this with Kjeld Staps, owner of NFTs.nl, a company that helps Dutch entrepreneurs, artists, musicians, and celebrities create, launch, and sell NFTs. “What we find today is that the technology offered by NFTs is gigantic, but the back end of the digital infrastructure is not there yet. So the ideas that companies have now cannot be properly implemented yet. I won’t say it’s going too fast, but it’s still developing. Like bol.com and Amazon they started with book sales and then expanded.’
According to Staps, many companies will be created in the near future to offer new services related to NFTs, because that market is still developing enormously. But once the digital infrastructure is in order, there will be plenty of possibilities for web stores, and not just at the product level. “NFTs provide a certain verification, an NFT can prove you own something official digitally,” Staps continues. ‘That works with a code technique, the blockchain technique. This makes it transparent and you can always check if it is really the real product. Soon you will not only be offering a product through NFT, but you will also be able to link it with a service. So, as a consumer, you own a certain NFT of a brand and that brand could give you an exclusive right to a part of a web store that you wouldn’t normally be able to access. A kind of entrance ticket. At the moment it is still the case that you log in to a web shop with a username and password, in the future you will also be able to log in with your digital wallet and make transactions with it. So it’s very wide.
The world of NFTs, therefore, does not end with digital fashion items, but for the moment, that is, in addition to digital art, something that is often used. That makes sense, says Hofstede. ‘You can distinguish yourself in this market. People like to wear a unique suit, dress or expensive glasses in the digital world that we will enter more and more in the future. And not so much with a shirt from a conventional brand.’ Van der Veer adds: “There is a large group of young people who are into premium and luxury fashion. Luxury fashion is already a very large segment. For them it is super important to create an identity and image. Make no mistake, for high school age teenagers, cryptocurrencies are already very much alive. Simply, young people are much more involved with the digital world and therefore also with NFTs’.
Staps is also seeing the entry of luxury brands in particular at the moment. In terms of security, NFTs are a step forward for those brands, he notes: ‘If you buy a Rolex now, you get a physical certificate with it, but how difficult is it to counterfeit? With the blockchain technology that NFTs are linked to, you can immediately check if it is a real certificate. A program has not yet been developed in the system that contains certificates that are tied to physical products, but that will certainly happen.”
Then, the question that started this article: should retailers and brands go online now, or is it better to stay tuned for a while? For Staps this is clear: ‘For now, be patient. Research and wait. Don’t be afraid of missing out as a web store owner. Better wait for him to jump risky now. Because once you start working with NFT, you make a promise because it’s on the blockchain forever.”
Finally, Hofstede: ‘Many retailers currently have other concerns, such as recovering from the corona crisis and want to establish a better omnichannel proposition first. NFT is then one step too far. You can’t do everything at once. In addition, it is mainly the large ones that have the capacity and budget for it. It’s still not for the average retailer.’
Shopify: ‘Certainly interesting NFTs for merchants’
E-commerce solution Shopify launched an NFT Beta program for US merchants late last year. This allows the creation and sale of NFTs through the platform. At the moment, the program can only be used by US sellers, but the platform sees many possibilities for the future. A short interview with product manager Robleh Jama.
How does Shopify see the arrival of NFTs?
“We believe that NFT is a very interesting tool that allows merchants to create great trading experiences. Of course, NFTs are nice to have, but even more exciting and engaging are the experiences buyers can get with them. NFTs allow buyers and sellers to share a more useful relationship, that’s what trading is all about.”
What opportunities do you see for web shops?
“Through NFT, Shopify allows merchants to showcase their individual creativity and authenticity. Additionally, we believe there are many opportunities for stores to build a deeper connection with their community using NFT. Through token gating*, merchants can offer exclusive experiences to shoppers holding their NFTs, such as the ability to purchase exclusive merchandise or attend special events.”
Is this something that is already for a wide audience, or is it for the ‘happy few’?
“We believe that we are only at the beginning of discovering the possibilities of NFTs. In the future, we hope to make NFTs and token-driven trading available to a broader audience. The best thing about NFTs isn’t just about buying and displaying them, it’s about what you get once you own them.”
In America, Shopify already has the NFT Beta Program. Do you think this will be implemented soon?
The ability to sell NFTs through Shopify storefronts is currently only available in Early Access for the US, but any merchant can start using tokens on Shopify by installing an approved third-party app.”
* Grant exclusive access to a specific NFT.